Lease or Sell Casper Company owns a equipment with a cost of $366,000 and accumulated depreciation of $53,200 that can be sold for $273,400, less a 3% sales commission. Alternatively, Casper Company can lease the equipment to another company for three years for a total of $285,200, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,100 over the three years.
Prepare a differential analysis on March 23 as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Answer:

The Company should sell the equipment (Alternative 2)

Explanation:

Preparation of a differential analysis on March 23 as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment.

DIFFERENTIAL ANALYSIS

Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23, 2014

Lease Equipment (Alternative 1); Sell Equipment (Alternative 2) Differential Effect on Income (Alternative 2)

Revenues $285,200 $273,400 –$11,800

Costs –$15,100 –$8,202 $6,898

($273,400*3%=$8,202)

Income (Loss) $270,100 $265,198 $4,902

Based on the above Differential Analysis the Company should sell the equipment (Alternative 2) reason been that the company income will increase by $4,902 If the Equipment is sold out.

COTB MC Qu. 8-31 (Static) Assume a company is preparing a... Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What amount of accounts receivable would the company report in its balance sheet at the end of the second month

Your company has finished working on an open world video game, CyberPerson 2080. You now have a decision to make. You can auction your game off to a publisher, or you can keep your game and do the marketing and publishing yourself. If you auction your game off, your analytics team estimates there is a 25% chance you will earn $5 million, a 35% chance you will earn $12 million, and a 40% chance you will earn $16 million. If you keep your game, your marketing and publishing costs will be $7 million. If you keep your game, your analytics team estimates there is a 30% chance your game will be a critical and commercial hit, a 25% chance your game will sell well and make gross revenues of $12 million, and a 45% chance another similar game will come out at the same time and you will make gross revenues of $1 million.

If your game is a critical and commercial hit, there is a 60% chance it is on the "best of the year" lists and makes gross revenues of $64 million, a 35% chance it stays on the top seller lists for weeks and makes gross revenues of $28 million, and a 5% chance it makes gross revenues of $18 million. Assume you make decisions using expected value, and you are an expected value maximizer. If you make the optimal decision, how much will you expect to earn from your game?

Question Instructions
- Answer all the questions provided.
- Show your calculations in detail and explain the rationale of your answers thoroughly.
- Calculators are allowed.

1. A kitchenware company asked 10 customers the number of times they used the specialty cooking equipment they bought from the company in the last month:

4 6 8 6 7 2 1 8 12 10

A) Calculate the mean number of uses in the last month.
[5 marks]

B) Calculate the standard deviation. Make sure to show your calculations.
[15 marks]


2. A drilling company has estimated a 60% chance of striking oil for their new well. A detailed test has been scheduled. Historically, 40% of successful wells have had detailed test, and 10% of unsuccessful wells have had detailed test.

A) Given that this well has been scheduled for a detailed test, what is the probability that the well will be successful? Use Bayes’ Theorem.
[10 marks]


B) Would you say that the probability of successful drilling and the probability of having a detailed test are independent? Explain your answer using probabilities.
[10 marks]


3. Answer the following questions in no more than 3-4 lines for each one:

A) Why do you think investigating sample is more efficient for statistical control than investigating an entire population?
[5 marks]

B) What sample size is large enough to assume that the sampling distribution of proportion is normally distributed?
[5 marks]


C) Can 100% confidence level be used to determine a population parameter?
[5 marks]


D) What happens to confidence intervals when the confidence level is increased?
[5 marks]





4. A company claims that the average consumer buys 50 bars of chocolate in a calendar year Suppose a random sample of 100 consumers displayed the following statistics regarding the number of chocolate bars consumed in a year: X-bar=40, S=25.

A) What are the null and alternative hypotheses to determine if the number of chocolates consumed in a year is actually more or less than 50?
[5 marks]


B) What would be the value of the test statistic in this case?
[5 marks]


C) Considering that a confidence level of 5% for a normally distributed sample corresponds to a statistic score of ±1.96, what is your inference of the outcome in (B)?
[5 marks]

D) Explain briefly what are the Type I and Type II errors.
[5 marks]


5. A research group is trying to predict the performance of students on final exams based on the amount of time students study during the year. They use the following data:

SST = 110.00
SSR = 90.25
n = 200

A) Determine the coefficient of determination r2 and interpret its meaning.
[8 marks]


B) Determine the standard error of the estimate.
[7 marks]

C) How useful do you think this regression model is for predicting the performance of students on exams by the variation of the time spent studying?
[5 marks]

The following items are relevant to the preparation of a statement of cash flows for Pier Imports Inc. 1. Comparative balance sheets show a decrease of $4,800 in accrued utilities payable for the current year. 2. Nontrade short-term notes payable to banks increased $64,000 during the current year due to new borrowings. 3. The following end-of-year adjusting entry was recorded. No other interest-related transactions or entries occurred during the year. Interest Expense 9,600 Premium on Bonds Payable 640 Interest Payable 10,240 4. $400 payment was made to reduce the principal balance of a nontrade loan from a bank. 5. Gross equipment account increased $16,000 during the year, accumulated depreciation increased $6,400, and depreciation expense for the period is $8,000. One item of equipment (cost $8,000, accumulated depreciation $1,600) was sold during the year; a gain of $800 on the sale was recognized. 6. Purchase of treasury stock, $24,000. 7. Distribution of cash dividends, $4,000. 8. Sale of available-for-sale debt securities for $12,800, at a loss of $2,400. Note: For the following questions, indicate a net cash outflow with a negative sign. a. Determine the amount of net cash flows that would be reported in the investing section of the statement of cash flows. Answer 0 b. Determine the amount of net cash flows that would be reported in the financing section of the statement of cash flows.

Oscanda Accessories Corporation manufactured 21,400 travel bags during March. The following fixed overhead data pertain to March: Actual Static Budget Production 21,400 units 22,000 units Machine-hours 3,400 hours 4,400 hours Fixed overhead cost for March $176,300 $184,800 What is the amount of fixed overhead spending variance

The Clean Air Act (CAA) of 1970 did all of the following except _____.


establish the National Ambient Air Quality Standards (NAAQS)

introduce motor vehicle emissions controls

create State Improvement Plans (SIP) to promote better air quality

reduce the federal government's enforcement authority

Once you have chosen a topic, what should you do before beginning the research process?
Find as many possible facts and details on c. Discuss your idea with others
your topic
a. Find as many possible facts and details on your topic
b. Choose a position
C.Discuss your idea with others
d. None of these

On December 31, 2020, the Bennett Company had 100,000 shares of common stock issued and outstanding. On July 1, 2021, the company sold 18,000 additional shares for cash. Bennett's net income for the year ended December 31, 2021, was $650,000. During 2021, Bennett declared and paid $71,000 in cash dividends on its nonconvertible preferred stock. What is the 2021 basic earnings per share

The basic determinant of the transactions demand for money is the multiple choice 1 interest rate. level of nominal GDP. reserve ratio. price level. b. The basic determinant of the asset demand for money is the multiple choice 2 interest rate. price level. level of nominal GDP. reserve ratio. c. Total money demand is the multiple choice 3 vertical sum of the private demand for money and the public demand for money. vertical sum of the transactions demand for money and the asset demand for money. horizontal sum of the consumer demand for money and the producer demand for money. horizontal sum of the transactions demand for money and the asset demand for money. d. The equilibrium interest rate in the money market is determined multiple choice 4 by how much the interest rate fluctuates over time. at the intersection of the aggregate demand and aggregate supply curves. at the intersection of the total demand for money curve and the supply of money curve. by the Fed. e. Complete the following statement: If there is an increase in the total demand for money, multiple choice 5 the equilibrium interest rate will rise. the money supply will rise. the money supply will fall. the equilibrium interest rate will fall. PrevQuestion 1 of 10 Total1 of 10Visit question mapNext

Brightstone Tire and Rubber Company has capacity to produce 204,000 tires. Brightstone presently produces and sells 156,000 tires for the North American market at a price of $100 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 24,000 tires for $86.5 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:

Direct materials $54
Direct labor 24
Factory overhead (62% variable) 24
Selling and administrative expenses (44% variable) 25
Total $127.00

Brightstone pays a selling commission equal to 4% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.65 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $165,424.

Required:
a. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors.
b. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors
c. What is the minimum price per unit that would be financially acceptable to Brightstone?

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends in arrears for preferred stock for the second year. a.$10,000 b.$25,000 c.$30,000 d.$0

Which of the following two ARMs is likely to be priced higher, that is, offered with a higher initial interest rate?

a. ARM A has a margin of 3 percent and is tied to a three-year index with payments adjustable every two years; payments cannot increase by more than 10 percent from the preceding period; the term is 30 years.
b. ARM B has a margin of 3 percent and is tied to a one-year index with payments to be adjusted each year; payments cannot increase by more than 10 percent from the preceding period; the term is 30 years.

Seidman Company manufactures and sells 20,000 units of product X per month. Each unit of product X sells for $17 and has a contribution margin of $8. If product X is discontinued, $45,000 in fixed monthly overhead costs would be eliminated and there would be no effect on the sales volume of Seidman Company's other products. If product X is discontinued, Seidman Company's monthly income before taxes should:

Rebecca Bennett is an 8-year-old who was recently diagnosed with diabetes mellitus. She is hospitalized with diabetic ketoacidosis, and she is beginning to learn about the disease process. Her parents are with her continually. She has an identical twin sister who is staying with her maternal grandparents.
Mrs. Bennett is concerned that Rebecca’s sister will also develop diabetes. Based on the preceding information, an acceptable response for the nurse to make would be to:________.
a. reassure the parents that the disease is not contagious.
b. discuss the hereditary and viral factors of type 1 diabetes.
c. discuss the hereditary factors of type 1 diabetes.
d. discuss the viral factors of type 1 diabetes.

The company has 7 million shares of common stock outstanding. The current share price is $68, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6%, and sells for 97% of par. The second issue has a face value of $40 million, a coupon rate of 6.5%, and sells for 108% of par. The first issue matures in 21 years, the second in 6 years. Suppose the most recent dividend was $3.25 and the dividend growth rate is 5%. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21%. What is the company’s WACC?

During the year, ABC. had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000, payment to workers, $2,000; and payment for machinery, $8,000. What amount would be reported for investing net cash flows on the Statement of Cash Flows (put a minus number in front if it is negative)

Bond valuation [LO14-2] Your investment department has researched possible investments in corporate debt securities. Among the available investments are the following $100 million bond issues, each dated January 1, 2021. Prices were determined by underwriters at different times during the last few weeks. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Company Bond Price Stated Rate
1. BB Corp. $ 107 million 15 %
2. DD Corp. $ 100 million 14 %
3. GG Corp. $ 93 million 13 %
Each of the bond issues matures on December 31, 2040, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield at January 1, 2021, is 14%.
Required: Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated?

For the year ended December 31, 2021, Norstar Industries reported net income of $960,000. At January 1, 2021, the company had 1,050,000 common shares outstanding. The following changes in the number of shares occurred during 2021:
Apr. 30 Sold 80,000 shares in a public offering.
May 24 Declared and distributed a 5% stock dividend.
June 1 Issued 90,000 shares as part of the consideration for the purchase of assets from a subsidiary.
Required:
Compute Norstar's earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "EPS" answer to 2 decimal places. Do not round intermediate calculations.)

According to the survey article on mergers by Mukherjee et al,

A) a minority of managers believe that diversification can be a good reason to merge.
B) acquiring managers discount targets’ cash flows at the targets’ cost of capital.
C) managers do not believe operating synergies to be important in merger decisions.
D) managers do not use the discounted cash flow formula to value a target in a merger.

Statement Of Owner's Equity Jay Pembroke started a business in April. Prepare a Statement of Owner's Equity using the following balances for April transactions. Cash $12,165 Accounts Receivable 1,811 Office Supplies 4,747 Prepaid Insurance 1,492 Accounts Payable 346 Jay Pembroke, Capital 17,536 Jay Pembroke, Drawing 100 Service Fees 3,033 Rent Expense 600 You will need to calculate the net income for April.

Burns Industries currently manufactures and sells 11,000 power saws per month, although it has the capacity to produce 26,000 units per month. At the 11,000-unit-per-month level of production, the per-unit cost is $46, consisting of $30 in variable costs and $16 in fixed costs. Burns sells its saws to retail stores for $71 each. Allen Distributors has offered to purchase 4,100 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least: Multiple Choice $16. $46. $71. $30. qizket

Holbrook, a calendar year S corporation, distributes $89,500 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $107,400, Holbrook's AAA balance is $40,275, and Holbrook has $13,425 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $89,500 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0".

Distribution from Account Affect on Stock Basis Balance after Distribution
From AAA Account $8000 $8000 $0
From AEP Account $2500 $0 $0
From Cody's stock basis $ $ $

International Management Position (Scenario)
Global Choppers Inc. is an MNE based in Vancouver that manufactures high-quality motorcycles for sale around the world. The majority of design work is done at the Vancouver headquarters, but manufacturing and assembly are performed in company facilities located in Romania. In order to maintain control over manufacturing quality, Global Choppers sends representatives from the company headquarters to manage the Romanian facility for one year rotations. Conrad O'Neil has been selected to run the foreign facility for the upcoming year. The human resources department of Global Choppers will be preparing him for his foreign assignment through a variety of training methods.
Conrad's training for his assignment in Romania would most likely include ________.

Whirlwind mowers manufacturers and sells power lawnmower still public and distributes the products through its own dealers. Andrew is a homeowner who has purchased a power mower from an authorized dealer on the basis of the dealer's recommendation that the mower is the best one available to the job. Andrew was cutting his lawn when the mower blade flew off and seriously injured his leg.

Required:
a. Andrew sues Whirlwind Mowers and asks for damages based on negligence in producing the power mower. Is Whirlwind Mowers guilty of negligence? Explain your answer.
b. The doctrine of res ipsa loquitur can often be applied to cases of this type. Show how this doctrine can be applied to this case. Your answer must include a definition of res ipsa loquitur .
c. Explain the various types of damages that Andrew might receive if Whirlwind Mowers is found guilty of negligence.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should B) shift the short-run aggregate supply curve to the right. D) move the economy down along a stationary short-run aggregate supply curve. C) move the economy up along a stationary short-run aggregate supply curve. A) shift the short-run aggregate supply curve to the left.

Yolo Company, which has excess capacity (i.e. it doesn't have to give up producing and selling products in the normal market if it accepts a special order), received a special order for 4,500 units at a price of $16 per unit. Currently, production and sales are anticipated to be 11,000 units without considering the special order. Budget information for the current year follows. Sales $ 231,000 Less: Cost of Goods Sold 165,000 Gross Margin $ 66,000 Cost of goods sold includes $44,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:

Hotel California Hotel California is a luxury hotel which has just got a new manager, Rocky. Given its location and quality, the hotel always had enough people making advance reservations to fill up all the rooms available. The hotel charges $200 per room per night for reservations made in advance (Hint:think of this $200 as the purchasing cost in the Newsvendor model). Rocky had taken the OPRE3310 at UTD last semester and decided to implement some of those techniques in his current job. He implemented a policy of reserving some rooms for last-minute requests and charges these requests S300 per room per night (Hint: think of this $300 as the selling price in the Newsvendor model) The unsold reserved rooms are worth nothing at the end of the day (Hint: that is the salvage value is $0). Based on his estimation, the number of last minute customers is uniformly distributed with minimum of 1 and maximum of 10
a) How much is the cost of reserving too little by one? That is the underage cost, Cu
b) How much is the cost of reserving too much by one? That is the overage cost, Co
c) What is the optimal service level?
d) How many rooms should be reserved for last-minute customers? Hint: what is Q"?

Everything else held constant, in the market for reserves, when the federal funds rate is 2%, lowering the interest rate paid on excess reserves rate from 1% to 0.5% has no effect on the federal funds rate. has an indeterminate effect on the federal funds rate. lowers the federal funds rate. raises the federal funds rate.

Video Planet (VP) sells a big screen TV package consisting of a 60-inch HDTV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,700, sells the remote separately for $100, and offers the installation service separately for $200. The entire package sells for $1,900.
Required: How much revenue would be allocated to the TV, the remote, and the installation service?

You work for a mature company with a long history in the industry and have been given stock options. Which of the following are you most likely wanting to see happen with top line (revenue) and bottom line (net profit) growth rates?
A. Top line and bottom line holding steady without much variation.
B. Top line growing faster than bottom line.
C. Bottom line growing faster than top line.
D. Both top and bottom line growing at the same rate.